Your Money - Business Report December 2023

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YOUR

MONEY Look to the experts for strategic advice on investments, loans, estate planning, retirement, and more. It’s “your money” and you deserve financial peace of mind.

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PRIVATE WEALTH MANAGEMENT

Why trust Regions for your clients?

Regions offers your clients the best of both worlds: the stability of a large financial institution, with over $150 billion in assets, combined with the personalized service and knowledge of a local bank. Providing everything from wealth planning to special needs trusts, we’re more than a referral your clients can count on. We’re the support they can count on for years to come.

See what a Wealth Advisor can do for you.

Visit regions.com/privatewealthmanagement.

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© 2023 Regions Bank. Banking products provided by Regions Bank. Only banking deposit products are FDIC insured. Some products and services are made available through Regions Asset Management, a business unit within Regions Wealth Management. | Regions and the Regions logo are registered trademarks of Regions Bank. The LifeGreen color is a trademark of Regions Bank.

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AI already impacting financial markets

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inance is a highly competitive industry, so it’s not surprising that Artificial Intelligence (AI) has already gained broad adoption through chatbots, machine learning algorithms and various other means.

In fact, AI is modernizing the entire industry by streamlining processes and gaining deeper insights from generated data. With AI as part of their infrastructure, companies in the finance space can perform real-time calculations to forecast performance, detect unusual spending behavior, or maintain compliance.

AI is expected to have the most significant impacts in: LENDING – Machine learning algorithms allow businesses to go beyond the typical examination of credit scores and credit histories to rate borrowers’ creditworthiness when applying for credit cards and other loans.

FRAUD DETECTION – Algorithms can sort through large volumes of transaction data to flag suspicious activity and possible fraud.

These algorithms can suggest risk rules for banks to help block illegal activity such as suspicious logins, identity theft attempts and fraudulent transactions.

INSURANCE – Some insurance companies use AI for customer service with chatbots that interface with customers to offer quotes and process claims. Fraud detection algorithms are also necessary in insurance. That helps make high-speed claims processing possible, better serving customers.

CUSTOMER SERVICE – Customer service is crucial in the banking industry and good customer service can often differentiate one institution from another and retain valuable customers. Banks use AI for customer service in a wide range of activities, including receiving queries through a chatbot or a voice recognition application. AI chatbots help companies respond quickly to customers, and it also has the potential to be used for new products, including product recommendation, new account sign-ups, and even credit products.

INVESTING – AI is also being used for investing platforms by recommending stock picks and content for users. Popular trading apps frequently use AI to differentiate themselves from competitors and recommend investment opportunities based on things like risk tolerance and investing style and history. Its AI tools help personalize the user experience.

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Risks and rewards

The finance world has been marked by an increasingly digitized market

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he digitization of the financial space has had an undeniable impact in recent years. Whether it be the advent of online banking, the formation of neobanks, or the rise and fall of cryptocurrency, there are few who haven’t noticed.

Cryptocurrency has gotten the most press, more bad than good, in recent months. Cryptocurrencies run on a distributed public ledger called blockchain.

Units of cryptocurrency are created through a process called mining, which involves using computer power to solve complicated mathematical problems that generate coins.

While it held a lot of promise just two short years ago, the value of many cryptocurrencies has fallen significantly and some of the biggest businesses in the sector have gone under. (Sam Bankman-Fried was A neobank is a tech company recently found guilty of seven criminal that provides online banking counts in his trial on the collapse of services—apps, software and FTX, the bankrupt cryptocurrency other technologies—through a exchange.) Nevertheless, many partnership with an established experts say the crypto industry bank. These services are designed isn’t dead. In fact, there have been to streamline customers’ mobile some positive signs of recovery and online banking tasks. and investors believe that investing in stable digital currencies such as Bitcoin remains a safe choice.

Still, there are risks: Financial loss – Bitcoin and other cryptocurrency prices have been highly volatile, and fluctuations could result in significant losses if sold at the wrong time.

Future regulation – Cryptocurrency trading is currently not well regulated, and additional oversight and regulation is likely.

Fraud and cybercrime – Bitcoin exchanges have been subject to computer outages and a large-scale cyberattack could limit access in an emergency.

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Theft or loss – A login ID and password is usually required to access a cryptocurrency exchange, therefore, access could be denied if lost or stolen.

THE GROWTH OF NEOBANKS Brick and mortar banking is gradually fading into the sunset as more customers become accustomed to performing many of their transactions remotely.

Neobanks have had a profound impact on traditional banks, forcing them to adapt and innovate in the digital realm.

Neobanks offer apps, software and other technologies to streamline mobile and online banking.

They generally specialize in financial products, such as checking and savings accounts. They also tend to be more transparent than brick and mortar banks.

Nevertheless, like all financial institutions, neobanks have their share of pros and cons: PROS Lower fees – Like online banks, neobanks don’t have the costs associated with maintaining branches.

Some platforms pass those savings on to their customers in the form of lower fees.

Higher rates – Because of lower overhead costs, neobanks often offer higher interest rates to their customers.

Convenience – Depositing checks or making peerto-peer payments can be made via mobile or online banking from anywhere at any time.

CONS No bank charter – Neobanks generally partner with a traditional bank to insure their products.

Fewer services – Neobanks have pared-down services compared to traditional or online banks.

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Expert advice

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Estate taxes

Charitable gifts

Market dynamics

Investment portfolios

o matter how financially savvy you consider yourself to be, it’s always best to seek out the experts, especially if you are a high-networth individual (HNWI). Wealth advisors can create strategies to help you keep more of what you’ve earned and manage your wealth wisely now and in the future.

As you seek an advisor who suits your needs, be sure to meet with several and research their backgrounds before you make a decision. A qualified advisor will guide you not only on the “numbers” game, but will take into account your personal goals, values, lifestyle, family situation, and risk tolerance.

OTHER THINGS TO CONSIDER WHEN CHOOSING A WEALTH ADVISOR: • • • • • •

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REACH OUT TO PLAN ADVISORS Stephen Ellsworth

Marcus Fair

sellsworth@rwbaird.com 713.296.8053

mfair@rwbaird.com 713.296.8015

(225)-620-5959 | lagc.org | 666 North St. | Baton Rouge, LA 70802

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Tune in

O

ne third of Americans routinely listen to at least one podcast dedicated to topics such as self-improvement, politics, true crime, and of course, money. Podcasts that focus on finance are a great way to learn about business, economics, strategy, and investing. Google “financial podcasts” and you’ll find plenty of expert advice out there, including these below*: • • • • • • • • • •

CFO Thought Leader The Economist Invest Like the Best Strategic Financial Leadership Planet Money Exchanges at Goldman Sachs Count Me In Fast Money Podcast The Disciplined Investor M&A Science (*According to dealroom.net and financer.com)

“Money Talks, but Planning Pays” Educating Clients on Creating Financial Legacies Since 1996

“Money Talks”

with CHAD OLIVIER, CFP®, CEPA

Chad Olivier, CFP®, CEPA CEO, CERTIFIED FINANCIAL PLANNER™

Thursdays at 9 p.m. on Fox44 Fridays at 5:30 on Local33

Check out videos here:

4609 Bluebonnet Blvd., Ste. A | Baton Rouge, LA 70809 | 225.757.9484 | oliviergroup.com Securities offered through Cetera Advisor Networks LLC, Member FINRA/SIPC. Investment advisory services offered through CWM, LLC, an SEC Registered Investment Advisor. Cetera Advisor Networks LLC is under separate ownership from any other named entity.

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Long-term property investment

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he landscape has changed, but in general, longterm property ownership remains a smart idea and can produce financial advantages. If handled correctly, it can create a more stable portfolio for an investor.

However, rising interest rates over the last year have prompted some investors to tap the brakes. While there are a greater number of properties for sale, the cost for those properties, as well as interest rates, have increased. Depending on the circumstances, it could either be a great investment or a tragic mistake.

Nevertheless, here are some potential benefits of property investment in 2023 and beyond, regardless of the current economic environment:

TAX BENEFITS Several tax benefits come with owning property. In 2023, property taxes and mortgage interest paid could be deducted from personal taxes.

BUILD EQUITY One of the greatest advantages of purchasing a property is building equity. As one pays off their mortgage, their equity increases because the mortgage amount owed decreases with each payment, resulting in an accumulation of wealth. Owning property also provides stability and security. Furthermore, it can add to generational wealth.

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APPRECIATION IN VALUE Over time, a property’s value will likely appreciate, resulting in an increase in its worth. This is due to various factors such as inflation, the economy and the property’s condition. While there are no guarantees in these everchanging market conditions, trends suggest that real estate will always appreciate in the long term.

FORCED SAVINGS Property ownership is essentially forced savings. Money invested into the property will improve your overall net worth.

INVESTMENT WITH LOW VOLATILITY Properties are seen as less volatile compared to stocks and other investments, so a property investment could provide an additional hedge against inflation. When the rate is high, property values and rent keep pace; in other words, a rise in the cost of living will work to the owner’s advantage.

WORD OF WARNING There are, of course, some caveats to consider before taking the plunge. Be careful to purchase property in a developing location. Properties purchased in areas with high business traffic, for example, will likely generate more profit than those in rural areas. Additionally, properties aren’t liquid like stocks, bonds or other investments, so they’re not much help in an emergency situation when cash is needed quickly.

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redriverbank.net 225-923-0232

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CONSIDER THIS As you plan for retirement, take into account future income sources: • • • • • • • •

IRAs 401Ks Bank savings accounts Health savings accounts Social Security benefits Life insurance Annuities Other business interests

Saving for retirement

There could be a few new wrinkles in your plan this year

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lanning for retirement can be a daunting task for anyone, regardless of income level. Some of the biggest concerns include whether a retiree will be able to maintain their lifestyle, continue making charitable donations and/or leave an inheritance for their heirs.

This year, however, some new obstacles appeared—namely high inflation and rising interest rates—that should be factored into the equation.

These and other trends have created an uncertain environment that would worry even the most careful retirement planners.

Following are a few pointers:

INFLATION Americans have gotten a refresher course on the impact of rising prices with 40-year highs in the rate of U.S. inflation.

Nevertheless, in the long-term retirees should worry more about local property tax rates or the rising cost of health care.

Many financial advisors use a 2 to 3 percent annual inflation rate to simulate how a budget will evolve over the 25-year course of retirement.

IRA CONTRIBUTION LIMITS Keeping an eye on IRA contribution limits is critical for any retirement plan. Most significantly, the annual limits for traditional and Roth IRAs were 8 percent higher in 2023, rising to $6,500 from $6,000.

SOCIAL SECURITY It’s notable that Social Security’s cost-of-living adjustment for 2023 was 8.7 percent. However, 64

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experts advise retirees to delay taking benefits as long as possible. Instead, depend upon other sources of retirement income, such as a 401K or IRA, before taking Social Security benefits.

EARLY RETIREMENT A significant percentage of U.S. retirees leave the workforce earlier than planned, for a variety of reasons. Therefore, it’s important to remember people aren’t always realistic about when retirement happens.

You should start to plan for retirement immediately, even if you aren’t planning on retiring in the near term.

PART-TIME WORK Just 27 percent of retirees report that they collected a paycheck in retirement. If possible, however, it’s a good idea to keep the income flowing. Every dollar earned is another dollar preserved in your nest egg, which is essential during a bear market.

MINIMIZE THE TAX BURDEN For wealthier property owners, an adequate and updated estate tax plan can significantly minimize their heirs’ tax burden. By definition, the estate tax is a tax on the right to transfer property upon the death of the owner, whether that be cash and securities, real estate, insurance, trusts, annuities, business interests and/or other assets.

Fortunately, there are some steps an owner can take now to help minimize the amount of that tax burden—gifts, life insurance trusts, charitable donations, marital transfers, lifetime gifts to children and grandchildren etc. Consult with a financial planner to find what works best for you.

P E L I C A N

P R O S

Planning is critical to success.

Pelican can get you there “Our Clients prioritize their objectives. We identify and recommend the most efficient path to achieve their goals.

As Pelican Investment Advisor’s Managing Partner, I channel our expertise and experience to recommend strategies which can make Client’s goals become reality. One of our most important responsibilities is guiding Clients through market volatility and providing them the confidence to navigate downturns without being overwhelmed by negative emotions.”

We invite you to plan with us.

B ET H D AVI S , C PA, P F S , C F P ® , CGM A Pelican Investment Advisor Managing Partner

LOOKING FOR SMART, COMPREHENSIVE RISK & FINANCIAL MANAGEMENT ADVICE YOU CAN TRUST? CONTACT BETH | 225 293 9283

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Investment advice through Pelican Investment Advisors, LLC, a Registered Investment Adviser. Pelican Investment Advisors, LLC is not a Broker/Dealer.

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